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1033). In Masser, the taxpayer operated an interstate trucking
business from two proximately positioned pieces of business
realty that were used as part of a single economic unit. One of
the properties was subject to imminent condemnation, but the
taxpayer sold both parcels. In that circumstance, we held that
both pieces of realty were involuntarily converted and the gain
from both could be deferred.
Those cases reveal two general elements as being necessary
to qualify for deferral of gain under section 1033. First, a
taxpayer’s property must be involuntarily damaged, and second the
property must no longer be available for the taxpayer’s intended
business purposes for the property.
The Commissioner issued a revenue ruling that specifically
focused on whether gain from the sale of trees damaged by a
hurricane qualified under section 1033. In that ruling it was
held that the gain on sale of uprooted trees was “voluntary” and,
in addition, that there was no direct conversion into money in
the circumstances expressed in the ruling. See Rev. Rul. 72-372,
1972-2 C.B. 471. The principal rationale for the holding of Rev.
Rul. 72-372, supra, was that the hurricane did not cause the
conversion of the trees into cash or other property directly
resulting in gain from the damage.
In a second ruling, however, the 1972 ruling was revoked.
See Rev. Rul. 80-175, 1980-2 C.B. 230. The 1980 ruling permitted
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